Critical Illness Insurance
A lot of individuals and families struggle considerably with the diagnosis of a life-threatening disease. There are a few reasons for the same. Firstly, it can be emotionally draining to find out about such diseases. And more importantly, such illnesses can be quite expensive to treat. The emotional and financial stress can unsettle even the strongest of individuals. However, there is a sensible way to keep yourself and your loved ones safe from such occurrences. You can choose a critical illness policy.
What is critical illness policy?
A Critical illness policy is a defined benefit health insurance policy that aims to protect the insured and their loved ones against life-threatening diseases. Examples of such diseases include liver transplants, cancer, heart attack, etc.
The presence of a critical illness plan will ensure that you have the financial firepower to tackle such medical conditions head-on. Most health insurers offer a lump sum compensation on the diagnosis of such critical illnesses. And you can use the lump sum compensation to go about the treatment and other medical expenses.
Why opt for a Critical Illness plan?
Medical inflation is one of the highest inflation rates in the country. As the prices go up, it is only sensible to protect yourself with plans. And considering the exorbitant costs of treating life-threatening diseases, a critical illness plan can be your much-needed safety net in such cases.
For example, the cost of treating breast cancer can range anywhere between Rs. 14 lakhs to Rs. 16 lakhs. Likewise, the cost of a liver transplant can be in the range of Rs. 25 lakhs to Rs. 36 lakhs. Relying solely on your savings might not be the wisest decision, since there can be a lot of other expenses to worry about.
In such cases, a critical illness plan will provide you with the finances to proceed with the treatment. An indemnity health insurance plan would provide coverage only for hospitalisation expenses. But there could be a number of expenses not covered such as loss of pay, home care treatment, etc. which could be expensive and might need to continue for a long time. This is where a Fixed Benefit Plan of Critical Illness comes into play.
How does a Critical Illness plan work?
When you buy a critical illness plan, your insurance provider offers you coverage for a number of life-threatening diseases. If you are diagnosed with any of these diseases, your insurer will pay the sum insured for treatment and various other expenses. This is a Fixed Benefit plan, i.e. when the insured event happens, a fixed amount of money, i.e. the sum insured amount would be paid in full, irrespective of the amount spent on treatment.
For example, Tuhin buys a critical illness cover of Rs. 25 lakhs and is diagnosed with failure of one of the major organs, which needs a transplant. The insurance provider will pay Rs. 25 lakhs for the transplant and other expenses.
Critical Illness standalone plan v/s Critical Illness rider: Which one to opt for and why?
Insurance providers will let you buy critical illness coverage either as a standalone cover or as a rider to an existing policy. A standalone cover offers better coverage since it is designed specifically for critical illness. The sum insured on offer is also more flexible and you must undergo a waiting period.
On the other hand, a rider Critical Illness plan’s coverage depends on the base plan’s coverage and so does the sum insured. However, in a rider, the coverage is valid from the first day. However, a Critical Illness rider might not have many plans listed as it is a specific add-on benefit.
If you are looking for specific Critical Illness coverage, a standalone plan with a slightly higher premium is highly recommended. If you want comprehensive coverage for your critical illness, a standalone critical illness plan is always recommended. However, if you are fine with a lower coverage albeit a lower premium, a Critical Illness rider might just be for you.
Why Critical Illness plan to be taken along with an indemnity health insurance plan?
If you already have a health insurance plan provided by your employer or an existing plan, complementing it with a Critical Illness plan can be quite sensible. By paying the premium for a standalone policy, you will secure the finances in the future, if there is a diagnosis of critical illness.
The health insurance plan will cover some of the expenses and the lump sum from the Critical Illness plan will aid you with other expenses. It can be even more helpful if you are the only earner in the family.
How is a critical illness benefit different from other health insurance plans?
One of the major differences between a critical illness plan and a health insurance plan is the treatment expenses. A standard health insurance plan will only cover expenses related to treatment and hospital bills. However, it will not cover other expenses such as loss of income, and other miscellaneous expenses.
On the other hand, a critical illness plan will offer a lump sum payment on diagnosis. Thus, allowing you to use the money for treatment as well as other expenses.
Features and benefits of critical illness insurance plans
Opting for a very specific type of coverage such as a critical illness plan comes with quite a few features and benefits. The following are some of them.
1. Financial support:
The diagnosis of a critical illness can be quite taxing, both mentally and financially. And in such times, the last thing that you would want to have is to worry about expenses. A Critical Illness policy will ensure that you have adequate financial resources to undergo treatment and surgery if needed. Thereby allowing you to focus on the treatment.
And considering that life-threatening illness requires a lot of specific treatment, the cost of which can be heart-wrenching. The plan will unburden you and your loved ones of the expenses so that the primary focus is on recovery.
2. Income source:
Should a critical illness get to a stage where you cannot work anymore, the critical illness plan can serve as a source of income. Provided that you opt for an adequate sum insured in the first place. The amount that you receive for treatment, can be used for living expenses as well. And can be particularly helpful if you are the only earning member of the family.
3. Coverage
Depending on the insurance provider that you opt for, the list of diseases covered under a critical illness plan can be quite expansive. It would be sensible to go through the list of illnesses covered by the plan.
4. Investment
Treatment for normal diseases has been quite expensive in the country. One can only imagine, how much the treatment for a critical illness would cost. Investing a small amount in a Critical Illness plan would ensure that the insured can undergo expensive treatments, which would otherwise be difficult.
5. Tax benefits
The premiums that you pay towards a critical illness plan will allow you a tax deduction under Section 80D.
Advantages of critical illness insurance
Here are some advantages of choosing critical illness insurance over a standard health insurance plan.
1. Treatment costs
The plan will cover all medical expenses as well as the cost of hospitalization of the insured, for the treatment of a life-threatening disease.
2. Other expenses
Should you opt for adequate coverage, you can use the sum insured for various other expenses such as a source of income, paying off debts, living expenses, school fees, etc.
3. Abroad treatment
Some insurers offer coverage for the treatment of critical illnesses even in other countries.
Illnesses covered in critical illness insurance
The actual coverage of a critical illness plan would largely depend on the insurance provider. However, the following are some common examples of critical illnesses that are covered by a Critical Illness plan.
● Cancer
● Stroke
● Heart attack
● Parkinson’s disease
● Alzheimer’s disease
● Chronic lung disease
● Chronic liver disease
● Kidney failure
● Major organ transplants
● Aorta surgery
● Brain tumour
● Artery bypass surgery
● Paralysis
● Multiple sclerosis
● Replacement of heart valve
Critical Illness plan vs. cancer plan
While a Critical Illness plan offers a lump sum payment on the diagnosis of a critical illness, a cancer plan is specifically designed for cancer treatments. A cancer plan covers the expenses of various stages of cancer, which can be quite useful.
Conversely, a Critical Illness plan offers coverage for a wide range of critical illnesses and not just cancer. Yet both plans can be great supplements to a standard health insurance plan.
5 best Health insurers critical illness policies
Here are the top 5 critical illness insurance policies that you can buy in the country right now, along with some basic details.
1. Bajaj Allianz Criti Care Policy
The plan offers coverage of up to Rs. 2 Crores. The minimum payment of the plan starts at Rs. 257 per month.
2. Care Health Insurance Critical Illness Insurance
The plan offers coverage of up to Rs. 6 Crores. The minimum payment of the plan starts at Rs. 10,000 to Rs. 15,000 per year.
3. Bharti AXA Life Critical Illness Cover
The plan offers coverage of up to Rs. 2 Crores. The minimum payment of the plan starts at Rs. 428 per month.
4. SBI General Insurance Critical Illness Health Insurance
The plan offers coverage between Rs. 3 lakhs and Rs. 10 lakhs. The minimum payment of the plan starts at Rs. 428 per month.
5. Niva Bupa’s CritiCare Insurance Plan
The plan offers coverage between Rs. 3 lakhs to Rs. 2 Crores. The minimum payment of the plan starts at Rs. 12,500 per year.
Who should opt for a Critical Illness plan?
The cost of treatment of critical illness can easily set you back a lot, financially. Here are a few groups, who should opt for a critical illness plan. Though it is a sensible decision to opt for one irrespective, if you fall into any of the following groups, it is highly recommended.
1. Earners of the family
If you are the sole earner in the family, it is recommended that you opt for a critical illness cover. The lack of such a plan can jeopardise all financial plans that you have made for your loved ones over the years. Also, it will put the future of the family at risk.
2. History of illness
Some of the critical illnesses are hereditary. If anyone in the family has been diagnosed with critical illness, it increases the chances of you encountering the same. It would be wise to choose a critical illness policy in such occurrences.
3. Hectic jobs
If you are working in a high-pressure environment, that requires you always to be on your toes, there is a higher chance of being diagnosed with critical illness. Due to prolonged stress at work, one might develop critical illnesses. It is advisable to opt for a Critical Illness plan if your work can put you under a lot of stress.
4. In your 40s
People who cross the age of 40 are a bit more susceptible to critical illnesses. Also, buying a Critical Illness cover in your late 30s or early 40s will allow you to buy a plan at a more affordable premium.
What is covered and not covered in a Critical Illness plan?
Buying a critical illness plan offers you access to the following coverages.
Inclusion
● Financial safety against medical expenses.
● Tax savings under Section 80D.
● Look in a period of 15 days.
● Option to renew the policy for a lifetime.
● Access to the best treatment.
Exclusion
● Injuries that are self-inflicted.
● Cosmetic and dental surgeries.
● Illness due to smoking, consuming alcohol, or tobacco usage.
● Sexually transmitted diseases.
● Illness during the waiting period.
How to select an ideal critical illness insurance plan?
Once you decide to opt for a critical illness plan, you can use the following factors to find the ideal plan for your needs.
1. Buying early
Opting for a Critical Illness plan in your younger days will yield dividends later. When you buy the policy early, you will end up with a policy that has adequate coverage but does not cost a lot of money. Also, the coverage on offer varies vastly based on the age of the applicant. Younger people will receive wider coverage at affordable premiums. Whereas older people might find a few restrictions when it comes to coverage and it will come at a slightly higher premium.
2. Sum insured
Make sure that you choose a higher sum assured. It will provide you with an adequate financial cushion, should things not go in your favour in the future.
3. List of illnesses
You must access the website of your insurance provider and get a better look at the list of critical illnesses covered by them. Insurers who cover more illnesses offer a wider coverage.
4. Inclusions and exclusions
It is always wise to go through the inclusions and exclusions of any policy and it holds good for a Critical Illness plan as well. The inclusions and exclusions will help you get a better understanding of the limitations and capabilities of the plan.
5. Renewal
You can check whether the plan offers lifetime renewal options or has a maximum age till you can buy or renew the plan.
6. Waiting period
Insurers usually have a waiting period for critical illness plans. During the commencement of this period, you cannot file for any sort of claim. Ensure that you look at the waiting period of your critical illness plan.
How many Critical Illnesses to have?
The sum insured by a critical illness plan can vary a lot depending on your requirements. The average cost of treatment for a critical illness such as cancer can range between Rs. 25 lakhs to Rs. 30 lakhs. There can be a lot of other expenses as well. Thus, opting for a plan that has at least 40 lakhs would give you enough buffer to cover the expenses and a surplus for other expenses as well.
How to file a claim for critical illness policy?
To file a claim for critical illness coverage, you must inform your insurance provider about the intent. To file such a claim, a diagnostic report is needed, that states the critical illness the insured is suffering from. You can either opt for cashless treatment or reimbursement of the expenses.
Cashless
● For cashless services, you will need to fill out a pre-authorization form at the insurance desk of a network hospital.
● The hospital will then inform your insurance provider about the claim. On reviewing the request, they will either accept or reject the claims.
● Based on the approval, the insured can be hospitalised and undergo the necessary treatment.
● Prior to the discharge of the patient, the bill will be settled directly with the hospital.
Reimbursement
● The insured can get admitted to a non-network hospital and continue with the treatment.
● Once discharged, you can file a claim for reimbursement and provide all the necessary documents for the claim. Below is a list of all the documents needed.
● Your insurance provider will access the claim request and approve or reject the claim.
● On approval, you will receive the reimbursement amount directly to your registered account number.
What are the documents required at the time of critical illness insurance claim?
Keeping the following list of documents ready for the claim will ensure that your process is smooth and without any hassles.
● Claim form that is duly filled out. Most insurance providers allow online forms, which are simpler and faster to fill out.
● Consultation reports related to critical illness.
● Diagnostic reports related to the illness.
● NEFT details of the account, where you want the sum insured to be deposited in.
● Identification proof.
● All records of pre and post-hospitalisation.
Your insurance provider will verify the claim and all the documents submitted. It is quite possible that may reach out to you for any additional documents to support the claim. Upon completion of the verification process, they will transfer the amount to your account.
Tax benefits under a critical illness insurance policy
The premium that you pay towards buying a Critical Illness plan, allows you for a tax deduction under Section 80D of the Income Tax Act. Here are the maximum deductions under the section.
Particulars | Allowed deduction for Self, spouse and children | Allowed deduction for Parents | Maximum deduction |
Everyone is under 60 years | Rs. 25,000 | Rs. 25,000 | Rs. 50,000 |
Parents are above 60 years | Rs. 25,000 | Rs. 50,000 | Rs. 75,000 |
Everyone is above 60 years | Rs. 50,000 | Rs. 50,000 | Rs. 1 lakh |
Factors to keep in mind while opting for a critical insurance policy
Before choosing a Critical Illness plan, you must keep in mind the following factors. It will help you zero down on the best policy for yourself.
● Ensure that you go through the inclusions and exclusions of the policy. It will help you understand the policy better and avoid unwanted claim rejections as well.
● Make sure to find out any other perks of buying a Critical Illness plan from an insurance provider. These could be lower premiums or benefits on policy renewal.
● Do not forget to look at the claim settlement ratio of an insurance provider before choosing a policy.
● Do not forget to find out the maximum age that the policy will provide you cover for.
To Sum Up!
A critical illness plan acts as an excellent supplementary plan to your health insurance plan. Offering widespread coverage against life-threatening diseases and offering you financial assistance as well. Using the above information, you will be able to find the apt Critical Illness plan for your needs.
Frequently Asked Questions
Buying a critical illness plan despite a Mediclaim plan offers you better protection of your savings, provides cover against critical illness, and gives you access to the perks of a Critical Illness plan
The survival period in a Critical Illness plan refers to the duration that the insured must survive to be able to get the benefits of the plan. It usually ranges between 14 to 30 days from the diagnosis of a disease.
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The underwriter identifies businesses with a bright credit rating as risk-free because most such businesses will be paying premiums in time, and running them will be stable as well. What does it all amount to? If your business has a low credit rating score, you will have to dig deeper into your pocket and pay more on the premiums. Care for the bills and responsible interaction with the debt. The debt will improve your business credit score, and you’ll probably attract a better insurer that would reduce the premiums that you might face. Action steps: Business Credit Score Bill payments and premiums Pay off the debt as much as possible Low levels of credit utilization Shop Around for Quote Premiums and discounts differ from one insurance company to another. Advise that one goes around the companies to search for quotes then compare the quotes. Sometime following the price prices charged by others may save you much money. Price war is no option with faithful clients sometimes you must change a provider since you feel that another will sell you at better value. Review coverage from a “best value based on dollar coverage” standpoint rather than trying to find the least expensive. You want low-cost premiums, but you also want assurance coverage exists for your business. Action items Get quotes from three different insurance providers and
...Top 5 Business Insurance Policies Every Entrepreneur Should Know About Insurance has come to play an extremely crucial role in the modern fast-paced and uncertain business environment because of its elements that protect businesses against many kinds of risks that may crop up. If you also propose beginning with a new business or managing an already well-established business, which would help protect your business from losing finances and create sustainability for long periods of time, then you should know the right insurance policies. Not all kinds of insurance become inevitable to entrepreneurs and other people who do business in order to avoid risking their ventures. Top five business insurance policies that every entrepreneur should know. General Liability Insurance This might be the very reason why General Liability Insurance is one of the most basic forms of commercial insurance that will keep your business safe from claims against such an occurrence, if through your transactions or nature of business, you somehow damage other people’s property or else causes some damage in the health or any other type of harm. Some Benefits Property Damage: General liability insurance that relates to loss or the cost to rebuild properties due to the presence of your business. Bodily Injury: If one of your customers or many others, for that matter, gets hurt in your place of business, such insurance will compensate them for medical care and attorneys’ fees. Legal Liability: General Liability pays costs and damages if someone sues your business for the argument that your business has caused injuries or property damage too. Professional Liability Insurance, also known as Errors & Omissions Insurance This is also sometimes referred to as Errors and Omissions (E&O) Insurance. Its name probably has something to do with the practitioners who often use it most: lawyers, accountants, and even realtors do so much that this kind of insurance could be described after these types of professionals. The coverage of such insurance would protect your business against negligence, mistake, and failure to deliver promised services. Main Benefits : Litigation against Customer: Indeed, if the customer thinks that the service you offered to the client was a bad mark or something they lost because of your service, this cover will manage to get you money in order to indemnify for money spent on lawyers for the defense of your business. It contains some mistake and negligence that most accidents were caused due to negligence while giving your service. Such negativities that involve settlements and lawyers. Protects Reputation: It always protects your business from professional negligence claims, which tend to drag your business to court-that step always protects your business reputation. This means if an organization owns property or is leasing one, then the compulsorily insured property is a commercial property. It mainly insures physical assets such as a building or part of it, equipment, stock, furniture, and all other business properties against loss caused by dangers such as fire, theft, and natural disasters. Some of the main benefits Protection Against Natural Calamities: If any of these calamities threatens your property, be it fire, flood, or any other, it would pay to have your property restored or replaced. Commercial Equipment Insurance: This kind of insurance will cover your essential equipment, which includes computers, machinery, and other office furniture, so you can get back to business again in no time after an incidence. Inventory Insurance: This is pay put together by replacing the goods if your stock gets either destroyed or stolen so that you do not miss sales in time. Workers’ Compensation Insurance If you have employees, Workers Compensation Insurance is also the right thing to do well, and most states will require it. Workers compensation insurance pays your employees if they get hurt or fall ill at work. Major Advantages Healthcare Costs: The cost of medical and rehabilitation of injuries or diseases to which an employee is exposed on the job are provided under workers’ compensation. Wage Replacement: It also covers your business in case the worker cannot go to work, providing wage replacement. Legal Protection: This also protects the company from some litigations resulting from injuries since most of the states have disallowed people from taking lawsuits to their employers if they are receiving workers’ compensation. As these heights of digital threats are on the rise, it was realized that business organizations dealing with sensitive information from customers or money transactions electronically have to be in an increasingly demanding market for Cyber Liability Insurance. This particular type of insurance covers the loss resulting from lost data hacking and other types of cyberattacks. Key Benefits: Data Breach Coverage: cyber liability insurance will replace the money that it will cost to inform the customers, to notify them of credit monitoring, and to rebuild the lost data. Laws and Regulatory Fines: in case your company is liable for data breach of personal data, then this coverage can help relieve some of the legal fees to defend yourself besides other fines that you will face a probability of being charged with because you were breaking some regulations. Others include Reputation Management: At times, an attack may affect the reputation of your business. Cyber liability insurance therefore may also include public relation ventures that help recover reputation. Other thoughts for entrepreneurs: Except for these general types, there are the very specific types of business insurance that entrepreneurs might be interested to learn more about depending upon industry or geographic location or particular needs of the business. Other policies that might be useful to carry: Business Interruption Insurance: It will cover loss income in case your business had temporarily to shut down, for instance, a huge damage by natural disaster. Product Liability Insurance: Product liability insurance covers businesses as a product liability insurance form for the firms associated with the manufacturing or distribution of products. Such an insurance deals with claims involving the defects of the product or safety on the product. Business
...How to Build a Comprehensive Business Insurance Package Any firm needs to armor itself against any form of risk in this unpredictable world. Thereby, protecting one’s firm still calls for much importance than at any other time. An established business insurance package will ensure that your operations run according to schedule even during such times when unexpected things are springing around each corner. It is pretty confusing to those new to the game, but the world of business insurance can be explained in simple steps. Below are the steps on how you can construct an entire business insurance package to ensure you are fully covered in case of varying liabilities and losses. Business Insurance Package What is actually a business insurance package? Actually, a business insurance package is an offer of different insurance deals that will be meant to address varied kinds of risks that a given business may expose to. The specific bundle of a business insurance package can be general liability, property insurance, professional liability insurance, workers’ compensation amongst other risk components. All these can usually safeguard your business from any financial losses that it might incur due to accidents, lawsuits, natural disasters, and other calamities not yet foreseen or even in the imagination. Step 1: Categorizing Your Business Risks As you come up with an integrated insurance product, there is the need to identify particular risks of your business. Since no two businesses are similar, these factors become very important in classifying possible risks of your business. Among them, some are general and affect most businesses: Risk that emanates from physical characteristics: This is loss to the office, equipment, or stock occasioned by fire, theft, and causes including natural calamities. Liability-based risk: The risk precipitated out of a case of injury, negligence, and breach of contract lawsuit Employee-related risks: Injuries or illnesses that will adversely affect the employees at work and can be treated either medically or benefits fund-wise Industry-related risks: Risk is specific to a given industry; cyber risk is an industry-specific and particular only to IT companies. Malpractice risks are specific to the medical fraternity only. Knowing your risks may as well help you know which type of cover will go into your package. Step 2: Critical Types of Insurance Coverage With a much greater awareness of what you might lose, it’s high time to find some insurance covers that may be accessible to you. There are some essential kinds of cover every business would do very well to consider the following: Liability Insurance-General This would also include claims of lawsuits rising against the business over third parties for either actual or perceived physical or personal injury or damages to third party property like libel or slander. Most businesses need commercial property insurance because it would prevent lawsuits filed against a company in court and also some forms of claims brought about through the normal functioning of any business. Commercial Property Insurance Commercial property insurance protects your business’s physical assets: buildings, equipment, products, inventory, and furniture. It will cover you from losses that can occur through fire, theft, vandalism, and sometimes natural occurrence. This form of property insurance is also not required when purchasing ownership or leasehold interest. . Errors and Omissions Insurance Liability Coverage Errors and omission insurance, also referred to as professional liability, is supposed to cover the clients against third-party civil actions over unintentional errors or omissions represented by negligence. Such cover will offer defense costs and damages. This is one of the minimum covers for any business that involves professional practice or renders advice. It covers claims based on negligence, omissions, or errors that leave a client liable to lose money. Such businesses are risky because their activities are complex. Examples of such industries include legal services, accountancy, consultancy services amongst others . Workers’ Compensation Insurance That would be work-related injuries and illnesses for employees who get injured or fall sick for them to be compensated. Most states will require you to obtain this once you hire an employee. You’ll find yourself covering medical expenses, rehabilitation as well as lost wages while an employee is in the hospital. It will also protect your business from emerging with some liabilities of an injury-liability lawsuit. Business Interruption Insurance That is, if a covered loss-for example, hurricane or fire-disrupts your business operation, profits are made good. Other benefits of business interruption insurance include benefits on lost earnings and cost of continuing expenses and relocation expense if you should move your business temporarily so you may resume operations as soon as possible after the interruption. Other Insurance Coverage Of course, the above major policies form a business insurance package, but most businesses are structured in such a way that they need coverage beyond the policy above for certain industries. Consider adding some of the following options depending on your industry, location, and size of business: Cyber Liability Insurance This risk comes from the end as cyber threats and data breaches pose it in this new era of technology. The cover also includes costs incurred on notification when the data breach happens, lawyer fees, and repair for damages. A company that collects such sensitive data about customers’ needs such a kind of coverage. Product Liability Insurance If your company manufactures or sells goods, it could be given a form of protection against damages or injuries caused to other persons because of a defective product-product liability insurance can offer relief in that aspect. It will benefit your business both economically, in terms of expensive battles in courtrooms, and loss incurred from a defect in the product. Commercial Auto Insurance Liability insurance covers all forms of liabilities against your business. And your business is covered by liability with any cars, may be a minivan or is a huge truck. Several risks, including physical damage, liability coverage, medical payments, and comprehensive along with collision coverages get protection with this option. Commercial auto insurance will be
...General Liability Insurance Vs. Professional Liability: What Does Your Business Need? Entrepreneurship exposes you to risks which are mostly tied to dealing with the customers, handling the employees, and perhaps doing your services. Business insurance can only be fundamental in covering risks and damages that may come when doing so. But choosing what to get sometimes gets tough because it is, after all, between general liability and professional liability. The point of contention is that both insurances cover different risks, but actually knowing the difference between general and professional liability can make a huge difference in ensuring that your business is really covered with the right insurance. What is General Liability? General Liability General liability is a type of insurance coverage for your business that will protect your business from claims of bodily injury, property damages, and advertising injury. Generally, general liability is considered one of the very basic policies most business concerns require as it offers far-ranging protection against common risks that occur in operations. General liability insurance covers This one will cover the expenses on their medical cost, your attorney fees and even settlement if a person gets hurt because of any business activities or while being on your company’s premises. Property Damage: This one will pay for the repairing or restoring of damages if your business damages any other person’s property. This would be the claims that occur on the basis of sums for slander or libel or for copyright infringement in the advertisements running for your business . Who needs general liability insurance? Most businesses, in most industries will obviously be able to take benefit of general liability insurance. Whether you run a small retail establishment, a restaurant, or are a contractor, general liability insurance provides core protection from general perils. It is particularly useful to businesses that get to interact with the public, are located inside buildings, or handle customers’ property. What is Professional Liability Insurance? It is also known as errors and omissions (E&O) insurance. This is an insurance cover that safeguards professionals practicing professional services or offering advice. They help safeguard a business from negligence, errors, omissions, or mistakes attributed to them causing financial loss to a client. What is Covered Under Professional Liability Professional liability normally covers Professional liability would deal with legal costs that may emerge while it is alleged that your business did not deliver services as they should have been; hence there was a financial loss for a client. Errors and Omissions Moulded on the principles, Errors and Omissions refer to mistakes, oversights, or omissions that may occur whilst in the process of providing professional services. Cost coverage against litigation: Professional liability pays for lawyers if there exists a frivolous lawsuit filed against you Who to Buy Professional Liability Insurance? Professional liability insurance is actually a necessary business product for any business engaged in the specialty service of consultancy, accountancy, law, real estate, and health care amongst others. It is specially for a business that quickly can bleed its clients out through an apparently innocent misstep or omission. For example, an investment advisor may give unwanted investment advice and end up losing for his client, he can sue for negligence. Diverging Factors between General Liability and Professional Liability The two types of insurance, liability and general liability, therefore, differ because each provides insurance against a different type of risk. The factors of divergence include: Scope of Coverage: General liability comes to promise protection from the risk of physical injury or damage to property. Professional liability protects against financial loss resulting from mistakes or omissions in professional services. Industry Suitability: General liability is a must for any organization that does business with the public, has a place of business, and or uses manufactured products. Professional liability is essential for any business that has or offers specialty advice or service where something can go wrong financially. Claims Recovered: General liability most often covers claims of third parties’ physical injury or damage. Professional liability is to protect against all forms of errors, omissions, and other forms of negligence in services. Do You Need General Liability and Professional Liability Insurance? This sometimes applies both general liability insurance and professional liability insurance. For instance, there is a marketing agency that requires general liability to act as cover, just in case the third party is injured or property damage occurs through events or meetings. At the same time, they might be asking for professional liability insurance against lawsuits of bad marketing advice, which escalates their client’s financial loss. Features to look for before choosing an insurance company Type of Industry and Business: The type of business you are engaged in is what goes a long way in determining the kind of insurance you need. If your business deals with one on one contact or third-party properties, then general liability insurance is absolutely essential. When you are into professional services, then professional liability insurance becomes very crucial. Risk Exposure: Clearly identify what your business is at risk to. For instance, if you are a construction firm, then the risks of property damages are higher and at a greater likelihood of personal injury that will require general liability. In law firms, the probable claim is against negligence, making professional liability more crucial. Client Contracts: Certain clients will insist that you secure general and professional liability insurance coverage before you transact business with them. Always refer to your contracts to determine if any specific coverages are required. Conclusion General liability insurance and professional liability are complementary forms of protection against risks that most businesses will face. While general liability is important for offsetting the physical risks, like physical injuries and damages to other’s properties, professional liability is also very significant for businesses whose lines of business are fundamentally services, facing exposures to potential errors, omissions, or negligence. Identify what type of insurance is appropriate for your business by viewing the industry that you are entering
...Why Big Businesses Need Commercial Umbrella Coverage? The risks associated with sophisticated occurrences such as legal liability and property damage of employee-related incidents happening within the firm are today characterized by high numbers of exposures to such incidents in large firms. Though most businesses have primary coverage for these occurrences, even the best of such standards do fail sometimes. That is where commercial umbrella coverage comes in. This liability coverage is more than the usual policies issued against large corporate entities; it will give cover to these corporations in case of sudden financial loss. What is Commercial Umbrella Insurance? Commercial umbrella insurance is an excess liability coverage. It kicks in when the limits of a corporation’s main insurance policies-for example, general liability, auto liability, or workers’ compensation-are exhausted. To put this another way, if a company were being sued and the amount to be paid was greater than what the primary liability insurance would pay, commercial umbrella insurance would pay the excess amount so that the company wouldn’t lose. Why Corporate Giants Require Commercial Umbrella Insurance Preventive measure against massive claims A large corporation is more likely to suffer due to its extensive scale and size, large workforce, and massive volumes of business. The possibility of huge claims is that they easily surpass standard policy limits. Be it a multi-million-dollar lawsuit or a severe accident in the workplace, fiscal implications could be huge. Commercial umbrella insurance goes a notch higher than normal protection of commercial policies to offer other types of cover that would ensure protection for business assets from the effects of a probably unknown incident. All kinds of risks Large corporations are cross-industry, cross-geography, and cross-jurisdictional. This makes them prone to all types of risks. Insurance can thus offer cover for most lines of insurance thereby protecting the companies against such risks as bodily injury to third parties, property damage, and even legal costs to defend a lawsuit. General protection is offered whereby most cases are covered. Emergent Risks Protection Among the emergent risks in the business environment include: The business environment is always in flux, and, like any change, it carries emergent risks along with it. Some of the most dominating examples of these emergent risks include cyber threats, claims regarding workplace discrimination, and liabilities related to the environment. Amongst all of these examples, some of them fall under the comprehensive umbrella of primary insurance, while the rest have to bear all the financial costs incurred by such emergent risks. Commercial umbrella insurance provides corporates with adequate cover to cope up with situations emerging due to risks that evolve with scale and complexity in their operations. Protection for high-value assets Larger corporations also own valuable assets like office buildings, factories, machinery, and fleets of vehicles. Any liability or damage related to these assets results in heavy financial losses if a corporation is held liable for an accident or damage that exceeds its general liability limits. Such differences are covered by commercial umbrella insurance. It is especially important for such corporations owning high-value assets with long-term health in terms of finance. Litigation Costs Litigation of lawsuits may take a long period and is expensive Even an organization might be involved in the lawsuit due to a workplace accident, a case of product liability or even a breach of contract Lawfully carried litigation that usually has an over cover of what they can claim of costs on the defense under the core insurance policies. Commercial umbrella insurance supplement resources to pay for these legal costs so that corporation is not legally overridden. Example scenarios for which commercial umbrella insurance must be used Claims for Product Liability: Consider for example a business dealing in the manufacture of very common and used products in which a fault is discovered leading to mass havoc or destruction. A fair number of people will sue the business. Even with the purchase of product liability insurance, the number of claims could quickly become more than policy limits and the business will be liable for the remainder. A commercial umbrella policy would protect the bottom line against liability over that amount. Industrials Workplace Accidents: Building sites, manufacturing premises, and huge office buildings are just the environments where the best laid safety plans can still go wrong. Perhaps even a serious injury or death claim would be outside of the company’s insurance umbrella. Commercial umbrella insurance will keep corporate America running without rocking the boat by covering huge claims without disrupting business or financial security. Auto Liability: Fleet operation always exposes a business firm to the possibility of a severe auto accident that may lead to very severe bodily injury claims or property damage claims. And even when a company holds commercial auto insurance, a severe accident may gobble up the limit of such insurances. That is why there is commercial umbrella insurance in place so that the business does not end up naked in such incidents. Why Commercial Umbrella Insurance Affordably priced insurance coverage Of course, the biggest benefit that one can derive from commercial umbrella insurance coverage is extremely high coverage limits for an altogether reasonable premium. What a company is left holding but adding billions of dollars to a variety of primary policy limits, rather than purchasing an umbrella policy that comes paired with extending coverage over multiple policies, for a much more modest premium. Peace of Mind This would give corporate bodies that added layer of protection, hence being able to manage risks better with peace of mind. Executives and stakeholders will be assured that the company has a broad layer of liability protection and therefore focus more on growth and innovation knowing it will not continually lose much sleep over large financial setbacks. Business Reputation Improved They shall have a business which is well covered against risks. More than that, prudent practices and expectations of the business would be set to prepare for the unexpected, thus vesting
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